Swing Trading is an investment technique that uses graphics that share prices draws session to session to detect trends, either bullish or bearish, and follow the market, taking advantage of them to make money, so when the market rises as when falls.
To implement the strategy you can use any financial product: stocks, futures or ETFs. Although, by way of example and to illustrate this technique, we consider a product use versatile and easy to use.
That product is the CFD.
Index
1 Practical Application
2 Strategic Variant
3 References
4 External links
Practical application
The first thing we do to continue this strategy is to select a graphic CFD and then see if you are bullish or bearish, then we bought the position up or down and, finally, we calculate the Stop loss we should put that be, preferably a trailing stop that will move with the price.
When we are in the case of buying a position upwards (bullish) levels of Stop Loss (closing price of the position) will be lower than the last closing, ie, the Stop Loss will be below the price at which the price closed yesterday. Therefore, if in subsequent sessions and lower the price jumps Stop Loss we put, the long position will be closed automatically and a short position with the same price will appear.
This point is very important because our sales order to put the stop was twice CFDs we had in portfolio, which the jump results in a bearish reversal in that price point and for the same amount we had to rise. This technique is used by many qualified through robots or HFT High Frequency Trading investors.
Now, without having to decide anything without having to think about whether or not the market will fall, only through our calculation of stops and our Stop Loss, we are ready to make money with the market downturn. Then, we calculate a new stop for the short position, which obviously will be more than the current price and also will to double the current investment.
When in subsequent sessions get the price upward overcome level stop short, then short positions were closed and long positions will open automatically, and so on.
In short, with this technique whenever you are in the market, and is the graph that you draw the quote and our Stop Loss that sometimes put us in short position, in which stop short will go down as low graphic and sometimes in long position, in which the stop will rise up as the chart.
Strategic variant
Optionally, you may follow the strategy of Swing Trading in a different variant. This variant is to place the Stop Loss without doubling the amount of securities in the portfolio. In this case, when skip a stop does not automatically open the opposite position, but a few minutes before the market close will open us the opposite position, but yes, on one condition: if indeed the price of the share price remains Stop Loss below, the opposite position is open, but if that does not happen, if before closing action had recovered the stop price, with the price above this, would enter long position, and thus would have avoided a break or stop failed to block the sweep.
This variant has an advantage and a disadvantage. The advantage is to avoid that market tensions we skip the stops, without changing the trend, which sometimes prevents unnecessary losses. The downside is you have to be more aware of the market, as there are open positions at market close every time you skip a stop.
